Friday, April 15, 2011

Third Party Payer and Fee for Use

Most people agree that there are services which the government must provide since they would be unavailable were we to leave it to individual initiatives and the free market. Some that come immediately to mind initially are fire and rescue/police, national parks, sewers and sanitation which if we left it up to the private sector to provide individual consumers, would be so scarce as to have adverse social effects. Therefore we pool our resources in the form of taxes in order to pay for and provide them to all citizens.

I think of the case recently in Tennessee where a rural community, unable to afford it's own fire department, left its residents to pay an annual fee to a fire department in a nearby municipality to ensure that fire trucks would respond were their house to catch fire. But one gentleman did not pay and as you might have guessed, his house went up in flames. The fire trucks from the nearby town which sold the fire engine subscription service arrived only to douse the homes of his neighbors with water. Those neighbors who paid the annual fee, that is. The homeowner begged the firemen to turn their hoses on his burning home but they refused. Most of us would, on hearing this story argue for universal fire and rescue coverage paid for by taxes (perhaps federal) so that there are not situations where small municipalities have to watch their homes burn for lack of payment to the authorities. Imagine how this would be if police required an annual payment.

But as information on the usage of publicly-provided goods and services becomes more readily available and finely tuned, we can probably start to charge directly for some services the government provides. For example, usage of certain roads through the use of transponders might be a way to supplement the taxes which are most commonly used in funding for road maintenance. Certainly regional and state parks use can be charged back to the individual. For those who choose not to use parks, while they still benefit from their proximity and availability and would continue to pay a base tax to support parks, would ultimately bear less financial burden than those who actually visit and pay a supplemental fee to do so. Many national parks charge usage fees but I don't know how much this income contributes to the general budget to keep them open and running.

Unfortunately were the government to become involved in payment processing for usage it would add some overhead expenses to the administration of (for example) parks and roads and there would have to be language absolving the government of additional liability from accident or mishap while using the facility beyond the current indemnity.

In these and other cases, the heaviest users of a resource can be billed more accurately. Outside of government it can and should be employed. For example, the issue of Internet neutrality is countered by a need to charge individuals who use bandwith at a far higher rate than others who pay the same monthly fee. As a librarian I'm all about free speech and free press and I hope content neutrality can be guaranteed in providing access to users. But my understanding is that a large chunk of Internet traffic is due to file sharing of music and movies and it comes from a very small segment of the total user population. So why not charge them for the bits they use relative to others.

One could argue that all citizens benefit from roads and parks whether they use them directly or not. And for this reason there should indeed be across the board charges (mostly income and property taxes) levied against all citizens of a jurisdiction to pay for these things. But a certain portion of the total cost (perhaps one third or 25%) should where possible be borne  by the direct user. In the case of roads that would include delivery drivers who would presumably pass along any cost increases to the consumer in the form of higher delivery charges or price for the commodity being delivered.

Advances in information technology will make such direct charges possible and the distribution of support for these public efforts more equitable.

No comments: